Retirement Calculator
Plan your retirement and financial independence
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What is Retirement Planning?
Retirement planning is the process of defining financial goals and creating a strategy to accumulate sufficient resources to maintain your standard of living when you stop working. Unlike relying solely on social security, having your own plan ensures more security and financial freedom.
It's essential to start early to harness the power of compound interest and have enough time to build solid wealth.
How Does the 4% Rule Work?
The 4% rule is a widely accepted guideline suggesting you can withdraw 4% of your wealth annually (adjusted for inflation each year) with low risk of depleting your resources during 30+ years of retirement.
Example: With $1,000,000 accumulated, you could withdraw $40,000 per year ($3,333/month) indefinitely.
How to Use the Calculator
- 1
Enter your current age and the age at which you want to retire. This defines your investment horizon.
- 2
Enter how much you've already saved for retirement. If starting from zero, enter 0.
- 3
Define how much you can invest per month. Be realistic based on your current budget.
- 4
Set the expected return rate:
- Conservative (fixed income): 6-8% per year
- Moderate (mix of fixed income and stocks): 8-10% per year
- Aggressive (stocks): 10-12% per year
- 5
Adjust expected inflation. The historical average varies, but 4% is a reasonable estimate.
- 6
Enter desired monthly income in today's values. The calculator will show if your goal is achievable.
- 7
Click Calculate to see your projections!
Practical Examples
Example 1: Starting at 30
Current age: 30 | Retirement age: 60 | Current savings: $20,000 | Monthly contribution: $1,500 | Return rate: 9% per year | Inflation: 4% per year | Desired income: $6,000/month
Result: Wealth of $2,800,000 ($850,000 real), possible income of $9,300/month
Example 2: Starting at 40
Current age: 40 | Retirement age: 65 | Current savings: $100,000 | Monthly contribution: $2,500 | Return rate: 8% per year | Inflation: 4% per year | Desired income: $8,000/month
Result: Wealth of $2,200,000 ($830,000 real), possible income of $7,300/month
Example 3: Starting at 25 (long term)
Current age: 25 | Retirement age: 55 | Current savings: $5,000 | Monthly contribution: $1,000 | Return rate: 10% per year | Inflation: 4% per year | Desired income: $5,000/month
Result: Wealth of $2,400,000 ($740,000 real), possible income of $8,000/month
Tips for Good Retirement Planning
Start as early as possible: Each additional year of investment makes a huge difference due to compound interest.
Be consistent: Treat retirement investment as a mandatory bill, not optional.
Review annually: Adjust contributions as your income increases and reassess if you're on track.
Diversify investments: Don't put everything in one type of investment. A mix of fixed and variable income is ideal.
Consider Social Security: This calculator is to supplement public retirement, not replace it entirely.
Plan to live longer: Life expectancy increases. Plan for 30-40 years of retirement.
Adjust risk with age: Younger can be more aggressive. Close to retirement, protect capital.
Have an emergency fund: Besides retirement, maintain 6-12 months of expenses in liquid assets.
Frequently Asked Questions
When should I start investing for retirement?
Ideally as soon as you start working. The earlier you start, the less monthly effort needed due to compound interest power.
How much should I invest per month?
A practical rule is to invest 10-20% of your gross income. The later you start, the higher this percentage should be.
What is the 4% rule?
It's a guideline suggesting you can withdraw 4% per year of accumulated wealth with low risk of depleting money in 30+ years.
Why consider inflation?
Inflation erodes purchasing power. $1 million today won't have the same value in 30 years. The calculator shows real adjusted values.
Can I rely only on Social Security?
Social Security has benefit caps and rules may change. It's prudent to have your own supplemental plan to maintain your standard of living.
What return rate is realistic?
Depends on your profile. Conservative: 6-8% per year. Moderate: 8-10%. Aggressive: 10-12%. Use historical averages, not unrealistic promises.
What if I don't reach my desired income?
You can: (1) increase monthly contributions, (2) work a few more years, (3) adjust income expectations, or (4) seek higher return investments (more risk).
Should I withdraw all returns in retirement?
No! The 4% rule allows you to withdraw without depleting principal. Wealth will continue earning and growing.
How to adjust the plan over the years?
Review annually: verify actual return obtained, adjust contributions with salary increases, and approaching retirement, reduce risks.
Is private pension worth it?
May be worth it for tax deductions or forced discipline. But compare fees - investing directly is generally more profitable.
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